This quote comes from Tim Harford, who argues that success is really just a product of failure. He believes we have to try, fail, and quickly correct our mistakes in order to properly succeed. Because failure is just an inevitability, no matter who you are, the key is to get better at recovering from it rather than trying to avoid it altogether.

Harford suggests that there are a few key things we need to pay attention to when dealing with failure. First is avoiding the denial that we’re wrong. He says, “It seems to be the hardest thing in the world to admit we’ve made a mistake and try to put it right. It requires you to challenge a status quo of your own making.” Sometimes we’ll go so far as to chase our losses just to avoid failure, as if accepting the failed situation will make all our effort worthless. In the end, we can’t predict what’s going to work. We can only experiment with trial and error. Failure is an important part of this process, and accepting it makes us capable of actually finding success in the long run.

Nielsen’s new “iPhone vs. Android” report offers up the latest numbers in the big mobile battle: Both platforms have loyal users, but Apple’s still on top by a long shot.

They don’t come as much of a surprise, but with all the talk of Android’s surging popularity and explosive app growth, Nielsen’s numbers do serve as a reminder that Apple still has a comfortable lead. Versus Android, that is—nationally, the iPhone’s still in second place, with a 28% market share compared to RIM’s 35% (Android has 9%; Windows Mobile has 19%).

But it will be interesting to see how things shake out over the course of the year. With the new iPhone dropping in a matter of weeks, prospective smart phone buyers (23% of U.S. mobile customers now have them) will be faced with the choice of hopping on the Apple wagon or exploring the multitude of Android options. As Matt noted in his Froyo review, Android is as polished as it’s ever been and is likely to improve even more in coming months. And while it’s hard to top the iPhone hype machine, reception to early versions of iPhone OS 4 hasn’t exactly been rapturous.

Another Nielsen graph shows that both platforms enjoy loyal users—80% of iPhone users want another iPhone; 70% of Android users want another Android phone—with Android’s group slightly more curious about the iPhone than the other way around. But in my experience, it seems like things are trending to the opposite. With Android’s app offerings increasingly matching up with the iPhone’s, I’m seeing more and more people considering Android a viable option for themselves, as well as one they can recommend to others.

Though still on top, Blackberry’s loyalty is only 47%, and as current Bold owner, I’m definitely of the 53% that’s planning on jumping ship when it comes time to buy my next phone. I’m just not sure what ship I want to jump into. [Nielsen via CNET]

Google’s Nexus One support forums have been flooded with anecdotes about the phone’s poor 3G connectivity, so one user decided to follow up with some reasonably scientific tests. The conclusion? The Nexus One is kind of terrible at basic cellphonery!

The test was simple and limited, consisting of one dude, user WV, wandering in and out of his house, recording signal strength as measured in dBm and ASU with Android’s built-in metering app. Assuming the Nexus One is supposed to work like a normal cellphones—that is, it connects to 3G networks when they’re available and EDGE only when they’re not—something’s wrong. Since the phone is obviously finding and receiving the cellular signals just fine, but not handling them as you’d expect, randomly flipping between the two—and evidently preferring EDGE most of the time—no matter how strong its signal is. This points to a software issue, not a hardware issue. That, and this:

OK. I found “Phone Info” screen through “Any Cut”. This looks like a screen not intended for average users. It clearly has settings that should not be messed with. However, it does have a pull down menu that was set to “WCDMA Preferred”. I changed this to “WCDMA Only”. The phone reset, and never a! gain saw the f’ing “E” on the signal indicator- ALL 3G. After about 1/2 hour of speed tests (150k – 800kbps) and google satellite map downloads (all definitely faster), I switched back to “WCDMA Preferred”. Guess what? After a few minutes, I was back on EDGE, even with a good signal. Switched back to “WCDMA Only”, and 3G it remains.

This doesn’t fully solve the problem, because as WV notes, if you fall out of T-Mobile’s 3G coverage area with EDGE disabled, you’re basically boned. But anyway, yes, this appears to be a software bug. Or, if you’re feeling conspiratorial today, like WV, a software feature:

My concern is whether T-mobile is being sneaky about this and purposefully dumbing down the 3G to Edge to reduce cell frequency congestion and/or their back-end network congestion.

I’m not sure I want to draw that nexus (haw?) quite yet, since the issue was first brought to light by comparing the Nexus One’s 3G/EDGE handling to other T-Mobile 3G Android handsets, and those, despite having the same data-sucking potential as the Google Phone, haven’t been throttled in any way. While Google and T-Mobile say they’re “investigating,” the evidence keeps mounting and the question looms larger: what’s really wrong with the Nexus One’s 3G? [Google Nexus One Support Forums]

Tim Quirk was the singer of punk-pop outfit Too Much Joy, signed by Warner Bros. in 1990. Now he’s an executive at an online music service, giving him insight on digital sales data and just how labels fudge their numbers.

I got something in the mail last week I’d been wanting for years: a Too Much Joy royalty statement from Warner Brothers that finally included our digital earnings. Though our catalog has been out of print physically since the late-1990s, the three albums we released on Giant/WB have been available digitally for about five years. Yet the royalty statements I received every six months kept insisting we had zero income, and our unrecouped balance ($395,277.18!)* stubbornly remained the same.

Now, I don’t ever expect that unrecouped balance to turn into a positive number, but since the band had been seeing thousands of dollars in digital royalties each year from IODA for the four indie albums we control ourselves, I figured five years’ worth of digital income from our far more popular major label albums would at least make a small dent in the figure. Our IODA royalties during that time had totaled about $12,000 – not a princely sum, but enough to suggest that the total haul over the same period from our major label material should be at least that much, if not two to five times more. Even with the band receiving only a percentage of the major label take, getting our unrecouped balance below $375,000 seemed reasonable, and knocking it closer to -$350,000 wasn’t out of the question.

So I was naively excited when I opened the envelope. And my answer was right there on the first page. In five years, our three albums earned us a grand total of… $62.47.

What the fuck?

I mean, w! e all kn ow that major labels are supposed to be venal masters of hiding money from artists, but they’re also supposed to be good at it, right? This figure wasn’t insulting because it was so small, it was insulting because it was so stupid.

Why It Was So Stupid

Here’s the thing: I work at Rhapsody. I know what we pay Warner Bros. for every stream and download, and I can look up exactly how many plays and downloads we’ve paid them for each TMJ tune that Warner controls. Moreover, Warner Bros. knows this, as my gig at Rhapsody is the only reason I was able to get them to add my digital royalties to my statement in the first place. For years I’d been pestering the label, but I hadn’t gotten anywhere till I was on a panel with a reasonably big wig in Warner Music Group’s business affairs team about a year ago

The panel took place at a legal conference, and focused on digital music and the crisis facing the record industry**. As you do at these things, the other panelists and I gathered for breakfast a couple hours before our session began, to discuss what topics we should address. Peter Jenner, who manages Billy Bragg and has been a needed gadfly for many years at events like these, wanted to discuss the little-understood fact that digital music services frequently pay labels advances in the tens of millions of dollars for access to their catalogs, and it’s unclear how (or if) that money is ever shared with artists.

I agreed that was a big issue, but said I had more immediate and mundane concerns, such as the fact that Warner wouldn’t even report my band’s iTunes sales to me.

The business affairs guy (who I am calling “the business affairs guy” rather than naming because he did me a favor by finally getting the digital royalties added to my statement, and I am grateful for that and don’t want this to sound like I’m attacking him personally, even though it’s abo! ut to se em like I am) said that it was complicated connecting Warner’s digital royalty payments to their existing accounting mechanisms, and that since my band was unrecouped they had “to take care of R.E.M. and the Red Hot Chili Peppers first.”

That kind of pissed me off. On the one hand, yeah, my band’s unrecouped and is unlikely ever to reach the point where Warner actually has to cut us a royalty check. On the other hand, though, they are contractually obligated to report what revenue they receive in our name, and, having helped build a database that tracks how much Rhapsody owes whom for what music gets played, I’m well aware of what is and isn’t complicated about doing so. It’s not something you have to build over and over again for each artist. It’s something you build once. It takes a while, and it can be expensive, and sometimes you make honest mistakes, but it’s not rocket science. Hell, it’s not even algebra! It’s just simple math.

I knew that each online service was reporting every download, and every play, for every track, to thousands of labels (more labels, I’m guessing, than Warner has artists to report to). And I also knew that IODA was able to tell me exactly how much money my band earned the previous month from Amazon ($11.05), Verizon (74 cents), Nokia (11 cents), MySpace (4 sad cents) and many more. I didn’t understand why Warner wasn’t reporting similar information back to my band – and if they weren’t doing it for Too Much Joy, I assumed they weren’t doing it for other artists.

To his credit, the business affairs guy told me he understood my point, and promised he’d pursue the matter internally on my behalf – which he did. It just took 13 months to get the results, which were (predictably, perhaps) ridiculous.

The sad thing is I don’t even think Warner is deliberately trying to screw TMJ and the hundreds of other also-rans and almost-weres they’ve signed over the years. The reality is more boring, but also more depressing. Like I said, they don’t actually ow! e us any money. But that’s what’s so weird about this, to me: they have the ability to tell the truth, and doing so won’t cost them anything.

They just can’t be bothered. They don’t care, because they don’t have to.

“$10,000 Is Nothing”

An interlude, here. Back in 1992, when TMJ was still a going concern and even the label thought maybe we’d join the hallowed company of recouped bands one day, Warner made a $10,000 accounting error on our statement (in their favor, naturally). When I caught this mistake, and brought it to the attention of someone with the power to correct it, he wasn’t just befuddled by my anger – he laughed at it. “$10,000 is nothing!” he chuckled.

If you’re like most people – especially people in unrecouped bands – “nothing” is not a word you ever use in conjunction with a figure like “$10,000,” but he seemed oblivious to that. “It’s a rounding error. It happens all the time. Why are you so worked up?”

These days I work for a reasonably large corporation myself, and, sadly, I understand exactly what the guy meant. When your revenues (and your expenses) are in the hundreds of millions of dollars, $10,000 mistakes are common, if undesirable.

I still think he was a jackass, though, and that sentence continues to haunt me. Because $10,000 might have been nothing to him, but it was clearly something to me. And his inability to take it seriously – to put himself in my place, just for the length of our phone call – suggested that people who care about $10,000 mistakes, and the principles of things, like, say, honoring contracts even when you don’t have to, are the real idiots.

As you may have divined by this point, I am conflicted about whether I am actually being a petty jerk by pursuing this, or whether labels just thrive on making fools like me feel like petty jerks. People in the record industry are very good at making bands believe they deserve the hundreds of thousands (or sometimes millions) of dollars labels advance th! e musici ans when they’re first signed, and even better at convincing those same musicians it’s the bands’ fault when those advances aren’t recouped (the last thing $10,000-Is-Nothing-Man yelled at me before he hung up was, “Too Much Joy never earned us shit!”*** as though that fact somehow negated their obligation to account honestly).

I don’t want to live in $10,000-Is-Nothing-Man’s world. But I do. We all do. We have no choice.

The Boring Reality

Back to my ridiculous Warner Bros. statement. As I flipped through its ten pages (seriously, it took ten pages to detail the $62.47 of income), I realized that Warner wasn’t being evil, just careless and unconcerned – an impression I confirmed a few days later when I spoke to a guy in their Royalties and Licensing department I am going to call Danny.****

I asked Danny why there were no royalties at all listed from iTunes, and he said, “Huh. There are no domestic downloads on here at all. Only streams. And it has international downloads, but no international streams. I have no idea why.” I asked Danny why the statement only seemed to list tracks from two of the three albums Warner had released – an entire album was missing. He said they could only report back what the digital services had provided to them, and the services must not have reported any activity for those other songs. When I suggested that seemed unlikely – that having every track from two albums listed by over a dozen different services, but zero tracks from a third album listed by any seemed more like an error on Warner’s side, he said he’d look into it. As I asked more questions (Why do we get paid 50% of the income from all the tracks on one album, but only 35.7143% of the income from all the tracks on another? Why did 29 plays of a track on the late, lamented MusicMatch earn a total of 63 cents when 1,016 plays of the exact same track on MySpace earned only 23 cents?) he eventually got to the heart of the matter: “We don’t normally do this for unrecouped bands,” he ! said. “B ut, I was told you’d asked.”

It’s possible I’m projecting my own insecurities onto calm, patient Danny, but I’m pretty sure the subtext of that comment was the same thing I’d heard from $10,000-Is-Nothing-Man: all these figures were pointless, and I was kind of being a jerk by wasting their time asking about them. After all, they have the Red Hot Chili Peppers to deal with, and the label actually owes those guys money.

Danny may even be right. But there’s another possibility – one I don’t necessarily subscribe to, but one that could be avoided entirely by humoring pests like me. There’s a theory that labels and publishers deliberately avoid creating the transparent accounting systems today’s technology enables. Because accurately accounting to my silly little band would mean accurately accounting to the less silly bands that are recouped, and paying them more money as a result.

If that’s true (and I emphasize the if, because it’s equally possible that people everywhere, including major label accounting departments, are just dumb and lazy)*****, then there’s more than my pride and principles on the line when I ask Danny in Royalties and Licensing to answer my many questions. I don’t feel a burning need to make the Red Hot Chili Peppers any more money, but I wouldn’t mind doing my small part to get us all out of the sad world $10,000-Is-Nothing-Man inhabits.

So I will keep asking, even though I sometimes feel like a petty jerk for doing so.

* A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn’t mean Warner “lost” nearly $400,000 on the band. That’s how much they spent on us, and we don’t see any royalty checks until it’s paid back, but it doesn’t get paid back out of the full price of every album sold. It gets paid back out of the band’s share of every albu! m sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let’s say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.

I do not share this information out of a Steve Albini-esque desire to rail against the major label system (he already wrote the definitive rant, which you can find here if you want even more figures, and enjoy having those figures bracketed with cursing and insults). I’m simply explaining why I’m not embarrassed that I “owe” Warner Bros. almost $400,000. They didn’t make a lot of money off of Too Much Joy. But they didn’t lose any, either. So whenever you hear some label flak claiming 98% of the bands they sign lose money for the company, substitute the phrase “just don’t earn enough” for the word “lose.”

** The whole conference took place at a semi-swank hotel on the island of St. Thomas, which is a funny place to gather to talk about how to save the music business, but that would be a whole different diatribe.

*** This same dynamic works in reverse – I interviewed the Butthole Surfers for Raygun magazine back in the 1990s, and Gibby Haynes described the odd feeling of visiting Capitol records’ offices and hearing, “a bunch of people go, ‘Hey, man, be cool to these guys, they’re a recouped band.’ I heard that a bunch of times.”

**** Again, I am avoiding using his real name because he returned my call promptly, and patiently answered my many questions, which is behavior I want to encourage, so I have no desire to lambaste him publicly.

***** Of course, these two possibilities are not mutually exclusive – it is also possible that labels are ! evil and avaricious AND dumb and lazy, at the same time.

Beer is yet another commodity and category that is being decimated by better quality alternatives. The means of production and distribution are no longer controlled by a very small number of big companies. Consumers find attractive alternatives in micro-brew beers or local beers. They have the means to access them (online) and have the product shipped directly to their homes. So no matter how much advertising the big companies do, if their product is just not that great, they will continue to lose customers to alternatives. The “lime” version of Bud Light was said to cannibalize sales of regular Bud Light. And rightly so, consumers are looking for a better product.

Source: http://adage.com/article?article_id=138141

Despite a flurry of new and improved ad pushes for the country’s leading brews, the days leading up to Independence Day, usually the biggest-selling period of the year for the category, led to gruesome sales declines vs. the same period last year. Sales for Anheuser-Busch’s Bud Light and Budweiser plunged 7% and 14%, respectively, in grocery, convenience and drug stores during the two-week period ending July 5, according to scanner data from Information Resources Inc. Miller Lite suffered a 9% drop. The big importers were hurt badly too: Corona marketer Crown Imports watched sales decline 6% to 8%, while Heineken and Diageo each saw double-digit drops.

marketing misconceptions

– “behavioral targeting” – the belief that people’s surfing behavior will indicate what they are likely to buy — of all my surfing, only a small portion of it is related to doing product research before I buy something, and it is usually limited to the few days or weeks just before the purchase. What advertisers don’t know is how to distinguish this finite surfing behavior which IS related to upcoming purchases from the rest of my surfing behavior which is NOT.

advertising misconceptions

– “targeting” – of course some targeting is better than no targeting (e.g. after-shave ads targeted to men vs women) but even with targeting (e.g. daypart, demographics, specific TV show spot) ads are still “shot” at large audience “buckets” and do not take into account the dozens of other parameters which come into play between the awareness of a product and its purchase (e.g. I just bought a mini van and no matter how many or how accurate mini van ads are, I will not buy another mini van.)

– “reach and frequency”- reach is “how many people you beat over the head with an ad message” and frequency as “how often you do so.”

– gross rating points – an approximation of approximations of estimates of round numbers of probabilities which currently guide the spending of billions of dollars on push advertising — that’s why they call it “gross”

social media misconceptions

– “social media” – thinking that people’s conversations are a form of “media” that can be purchased or “generated” by advertising; and that there is enough of it to achieve the “reach and frequency” advertisers are accustomed to in traditional advertising.

– thinking you can appoint or delegate either by an agency or an intern your precrafted voice in to people’s conversations. (it should be you or someone with a control over issues in the company, it’s not just talk)

– thinking its just talk

– thinking people are there to listen to your marketing pitch

– thinking if you spent enough time chattering you can start selling (you have to add value or no one will buy your product just because you have good bedside manners)

My colleagues know I have argued against advertising’s ability to do “demand generation” — create need where there was none before. Instead I have always argued that advertising solves an awareness “missing link” for demand that was already there. In other words, a user has a need. Advertising puts a new product or a product that a particular user was simply not aware of before on his radar screen. And after further research, if the product fulfills that need he buys. Advertising rarely creates NEW demand. For example, we buy 4 quarts of milk per week because we have 2 kids. No amount of milk advertising will make us buy 5 quarts, because we simply don’t need it. Or, we’ve just bought a minivan. No amount of advertising, no matter how cool the family or the kids in the ad, will make us buy another mini van. If we just locked in health insurance this year, we are likely not to buy more or to switch, just because it is such a hassle. Make up more of your own examples.

But, I have to say, Carl Jr’s ad with Padma is really really making me want their bacon, barbecue sauce burger. Or is it just ANY bacon, barbecue sauce burger? Or wait, is there even a Carl Jr around here? hmm ….. I guess I’ll just look at the picture some more… 🙂

March 30, 2009

-By Tim Nudd

Carl’s Jr. serves it piping hot.

When we learned in February that Padma Lakshmi was filming a commercial for Hardee’s/Carl’s Jr., it didn’t seem likely that the Top Chef host would make as big a splash as Paris Hilton did with her infamous car-wash spot for the fast-fo.od company in 2005. But Lakshmi has actually put her own impressively suggestive mark on burger advertising with the new ad, in which she makes sweet-and-savory love to a Western-bacon deluxe on the front steps of a city apartment building. Paris Hilton, please pack your knives and go.

it’s a simple matter of supply and demand. Let’s do a thought exercise.

1. eMarketer forecasts that retail e-commerce will grow roughly 10% per year for the next few years. This means that the total “pie” of people spending online will only grow by an average of 10% per year. Note that sales is (or should be) the goal of advertising. So that’s why we are looking at e-commerce sales and comparing it to online advertising because both are completed in the same medium and we can eliminate cross-media uncertainties and breakdown of tracking.

2. online advertising is still exploding with trillions of pageviews per month, thanks to social networks which throw off ungodly numbers of pageviews when people socialize with others. The Compete chart below shows the top social networks which rely on banner advertising (impression-based advertising) to make revenues. Notice that just Facebook and Myspace alone generate 115 BILLION pageviews a month. And if you consider that Facebook shows 3 ads per page, that would be 250+ BILLION impressions per month served by Facebook alone. Furthermore, the rate at which pageviews grow is 250% – 1,000% per year, depending on the site in question.

3. In the online medium, we have end-to-end tracking from the advertising (banner impression) through to the sale (e-commerce). The banner is served (impressions); a percent of users click on it to go to a site (click through rate – CTR); a percent of those make their way through the site and end up completing a purchase online (conversion rate). Those users who are looking for something and who are considering buying something will be online searching and researching. Those are the ones who are likely to click on banner ads, compared to others who are online to do something else, like write email, socialize with friends, etc. And if the purchase is their ultimate end-goal (to make a purchase) we have a farily reliable indicator of the growth in not only such interest but also the completion of the task — namely, e-commerce, which grows at 10%.

4. Now, if the number of people who will click grows that 10%, but the number of advertising impressions grows at a slow 250%, the ratio of clicks to impressions drops dramatically because the denominator is growing 25X faster than the numerator. Serving more ads simply will not get the amount of e-commerce to grow significantly faster. The point of diminishing returns has been reached and passed, so incremental ad impressions are ignored and useless. The number of people who will end up buying will not increase significantly faster. And given the tough economic climate the amount of sales may actually decline before it goes up again.

5. If we generalize this back to all retail commerce, it grows at an EVEN slower pace than ecommerce. When you compare this to the dramatic increase in ad impressions and the shift from traditional channels (TV, print, radio – whose impressions and audience sizes are dwindling) to online channels (portals, news sites, social networks – whose impressions and audience sizes are skyrocketing) again the ratio of sales to available advertising drops dramatically. This is a measure of the effectiveness of advertising (sales divided by advertising spend). It was already small — it sucked — and it will get dramatically smaller soon — it’ll suck more soon.

A way to mitigate this “sucking” is to peg advertising expenditures on a success metric which is an indicator of user intent — cost per click — versus a traditional indicator of reach and frequency — ad impressions served — which from the above is NOT an indicator of consumers’ intent to purchase. This way, advertisers only pay when someone clicks. Those “someones” click when they are looking for something and are more likely to complete a purchase than those who don’t click.

Digital Consigliere

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.